Frank Mancini

The State Attorney General’s office released a report this last December contending the deregulated auto insurance market has not decreases rates for consumers. Prior to deregulation Massachusetts insurance rates were set by state regulators and based on driving records and location the car is registered. Because of this there was little variation in quotes from one company to the next. Prior to deregulation insurance carriers were also required to write a policy for just about any driver which, no pun intended, drove many insurance carriers away from offering coverage in Massachusetts.

The new managed market allows insurance carriers to set their own rates, include more factors in the rating process, and reject more applicants. This means younger drivers, senior citizens, and those who do not own a home may will most likely have more expensive policies than a middle aged homeowner with an identical driving record. The managed market has brought a many insurance carriers to offer coverage in Massachusetts and create more competition.

Attorney General Martha Coakley expressed she was concerned drivers are not getting the best rates and protection. Coakley has proposed multiple improvements to the current system including the creation of a website for side-by-side comparisons of quotes for all carriers.

Frank Mancini, president of the Massachusetts Association of Insurance Agents disagrees with Coakley. Mancini stated:

The jury’s still out. Rates are probably going to go up because the business is cyclical, and that would have happened under the system we had.

Although Manchini agrees that the insurance division’s website has been less than efficient, he noted many drivers who receive lower rates utilized an insurance agent. Using an agent who writes insurance for more than one carrier is the best way to go about comparing auto insurance premiums. Someone who writes for more than one carrier will know the varying discounts each carrier offers and compare identical coverages for you. A great resource for this type of agent can be found through MassDrive.

The only way to truly make deregulation work for you is comparing quotes from different insurance carriers. Utilize the resources available and save yourself some stress, time and money.

In April 2008, the state government put a managed competition system in place through the Division of Insurance. After some time, the system still continues to receive mixed reviews.

Before the system, state government set the rates for auto insurance effectively regulating insurance providers’ ability to raise rates to gain more revenue. When the plan was first introduced, advocates believed the new system would bring in new carriers and those that opposed said the system would discriminate against select drivers.

The system is now in its second year but there have only been minor changes in the nature of the auto insurance market.

Three major auto insurance providers Allstate, Geico, and Progressive, have entered the market. 6 more small local providers have also joined since the market change. The difference between the larger and smaller providers is that the smaller ones have employed the services of local insurance agents.

It is a concern that with large providers not seeking help from local agents, agents will suffer. Frank Mancini, president and CEO of the Massachusetts Association of Insurance Agents, says that even with some consumers switching to the bigger providers, agents have yet to suffer substantial losses. Independent agents handle up to 78 percent of auto insurance policies in the state. The national figures are much lower, 30 to 35 percent.

The statistics from the first year of operation under the new system show that the average auto insurance cost dropped. With the new system being a hot topic for debate, critics and advocates will surely being watching the market closely.

NECN delivers a very important story for Massachusetts auto insurance consumers – if your insurance company raises your rates because of an accident and you think it’s unfair, you won’t be able to appeal it to the commonwealth beginning on April 1. Check out NECN’s reporting:

Here is a key point explained by NECN:

If you feel unfairly surcharged by your insurer, you can dump them and get a new insurer.

The Metro Daily News captured a great quote from Frank Mancini, president and CEO of the Massachusetts Association of Insurance Agents, regarding the introduction of competition to the Massachusetts auto insurance market:

“It’s a big change for everyone. We’ve had the same insurance system since the 1920s.”

An important point to remember; indeed, Massachusetts has embarked on an extremely large change and as a result, time will be needed to perfect the new system.